Primoris Services (NYSE:PRIM) reported lower third-quarter revenue as weaker renewables activity outweighed growth in its utilities, pipeline and natural gas generation businesses. Executives said a record backlog and the completion of troubled solar projects should support a recovery in 2027.
Revenue for the quarter was just under $2 billion, down $226 million, or 10.4%, from a year earlier, Chief Financial Officer Ken Dodgen said on the November 4 earnings call. Gross profit fell $31 million to $204.7 million.
The company updated its full-year 2026 outlook to earnings of $1.20 to $1.35 per diluted share, adjusted earnings of $2.10 to $2.25 per share and adjusted EBITDA of $290 million to $310 million. Dodgen said the ranges reflect delayed solar project starts, an expected seasonal slowdown in utilities and a higher effective tax rate.
Solar Delays Weigh on Outlook
President and CEO Koti Vadlamudi said five of six renewable projects that experienced significant cost overruns have been completed, with construction on the final project expected to reach mechanical completion in the coming weeks. Testing and commissioning at that site will continue into next year.
Primoris now expects approximately $1.7 billion in 2026 renewables revenue, down from its midyear expectation of $2 billion. Vadlamudi said a volatile regulatory environment contributed to project delays and fewer new awards and starts than anticipated. The company also declined to pursue some work that did not meet its risk, staffing or margin criteria.
Those factors deferred approximately $450 million of expected revenue beyond 2026, Vadlamudi said. Dodgen said most affected projects are moving from 2026 starts to 2027 starts, with one exception that Primoris chose not to pursue because of its risk profile. He cited regulatory disruptions, customer efforts to renegotiate power purchase agreements and, in some cases, permitting or interconnection issues.
Vadlamudi said the company expects modest renewables revenue growth from the $1.7 billion base in 2027. It anticipates roughly $800 million or more in fourth-quarter renewables bookings and potentially about twice that amount or more in the first quarter. Those figures are expectations, not booked awards.
Dodgen said the company has retained critical capacity while reducing some back-office and indirect resources as renewables revenue has fallen.
Energy Margins and Gas Generation
Energy segment revenue declined $262 million, or 17.6%, from a year earlier, primarily because of reduced renewables activity. Segment gross profit fell $45.2 million to $104.5 million, and gross margin declined to 8.5% from 10.1%.
Primoris expects Energy gross margins of 6% to 8% for 2026 and a return to its normal 10% to 12% range in 2027. Vadlamudi said improvement next year would likely be weighted toward the second half, reflecting the business mix and project maturity.
Natural gas generation is a major contributor to the anticipated recovery. Vadlamudi said 2026 revenue in that market should exceed $650 million, up more than 30% from 2025, and expressed confidence that it could exceed $1 billion in 2027. Primoris had approximately $900 million in verbal awards that could be booked in the fourth quarter and was tracking more than $7 billion in opportunities, he said.
In pipeline, the company won a $250 million project expected to begin construction in late 2027 or early 2028. It also expects to secure an additional $150 million job that would support 2027 activity. Vadlamudi said pipeline growth would likely be modest next year, with a more meaningful opportunity in 2028.
Utilities and PayneCrest Grow
Utilities revenue increased $33 million, or 4.5%, from a year earlier, as growth in gas operations and power delivery offset softer communications revenue. Segment gross profit rose $14.2 million to $100.2 million.
Vadlamudi said improved execution and a favorable work mix helped power delivery double gross profit year over year, despite minimal storm restoration activity. Communications remains pressured by delays in funding tied to the Broadband Equity, Access, and Deployment program and customer consolidation.
Dodgen said the roughly 13% Utilities gross margin discussed by analysts was typical for the third quarter; because of seasonality, the company continues to expect a full-year margin in the 10% to 12% range. He said Primoris is comfortably expecting high-single-digit Utilities revenue growth in 2027, with potential for somewhat more.
PayneCrest, acquired in May, had backlog of nearly $600 million, compared with approximately $260 million at acquisition. Vadlamudi said the business is expected to generate more than $300 million of revenue in its first eight months under Primoris ownership and could contribute more than $500 million in 2027. Labor availability will constrain its growth, he said.
Backlog, Cash Flow and Capital Allocation
Total backlog ended the quarter at just under $14.1 billion, up about $200 million from the second quarter and a company record. Master service agreement backlog increased by more than $300 million, primarily from power delivery and gas operations.
Third-quarter operating cash flow was $140.2 million, down from approximately $183 million a year earlier. Dodgen said Primoris now expects about $100 million in operating cash flow and essentially break-even free cash flow for the full year, reflecting lower EBITDA.
The company ended the quarter with $944 million in liquidity and a trailing 12-month net debt-to-EBITDA ratio of 1.8 times. Dodgen said Primoris had exhausted a prior $150 million share repurchase authorization and would be opportunistic with a newly approved $250 million program, while continuing to prioritize organic growth and suitable acquisitions.
Management has not finalized its 2027 financial plan, but Vadlamudi said the company is confident it can meet or exceed revenue expectations for next year. Dodgen said the first quarter is typically among the company’s lowest because of seasonal factors.
About Primoris Services (NYSE:PRIM)
Primoris Services Corporation (NYSE: PRIM) is a specialty contractor that provides construction, engineering, maintenance and fabrication services for critical infrastructure. The company serves customers in the energy, utilities and industrial markets, with work spanning power generation, power delivery, natural gas, renewable energy, petrochemical and industrial facilities.
Its services include utility and transmission construction, renewable energy development support, underground and overhead infrastructure, pipeline construction, facility maintenance, environmental services and specialty industrial construction.
